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Lunch for the taxman by Quentin Bates

Starbucks have been in the news in Britain after the extent of their efforts to avoid paying tax were made plain. Just in case m’learned friends are reading this on Starbucks’ behalf, I’ll state here and now that its buying and selling from and to itself between its own companies based in different countries to minimise tax liability is apparently not illegal. There’s a world of difference between tax evasion (illegal) and tax avoidance (legal). But that still doesn’t mean it doesn’t stink.

There is so much more to this. We have allowed to evolve an all-pervading culture of aggressive tax avoidance that presumably dances along the line dividing the legal from the illegal. This is far more than making use of the tax breaks open to the rest of us. Like any other writer or anyone who runs a small business, I can claim certain costs as expenses, as can Barbara, Christopher, Jim and the rest of us. We’d be stupid not to. These are things like travel, computers, phone costs and the like. But to get a rate of tax that approaches what Starbucks and others of the same ilk pay, I’d have to make a whopping loss, and if I made a loss like that I’d be on the street pretty soon. Yet these big hitters can turn substantial profits and pay minimal tax.

It’s not as if Starbucks are the only ones playing these games. A whole string of high street names, and doubtless a bunch more you’ve never heard of, are doing the same thing. Vodafone, Apple, Asda (Walmart’s UK arm), Apple, Google, Amazon, Ikea are among the names bandied about. It’s so pervasive that it’s not even as if consumers can vote with their feet and not use the tax-avoiders, because the whole gamut of business uses the same experts as we live increasingly in the shadow of the curse of the soulless bean counters who in fact are dangerously prominent in every facet of government and business, stifling imagination and intent only on the next quarter’s figures.

Government and business are bound together in an embrace that gives big business the opportunity to operate largely tax-free. Occasionally a politician will stand up and say a few well-chosen words that are designed to not offend the financial bruisers too much, but that’s as far as it goes. Britain’s government is clearly not interested in taking on the corporate shysters, scared of sending them overseas, maybe?

While we have a business climate that favours those wealthy enough to afford the best bean counters to keep them that way, it’s those at the bottom end of the scale who are, as always, getting the shitty end of the stick. In the name of austerity and to shore up our economies, we are living through some of the most drastic cuts ever seen to welfare, law enforcement, pensions and much the rest of the ground level stuff that differentiates a benevolent western democracy from a third world banana republic. We also have longstanding and expensive wars on drugs (largely ineffective) and terror (who knows what the spooks are up to?), plus a campaign of attrition against those who are in need of society’s largesse.

Yet there is remarkably little said about the deepening holes in Britain’s finances left by the über tax avoiders in comparison to the paltry amounts supposedly saved by clawing back benefits from invalids and single parents.

People and companies have always avoided tax. It’s human nature to not want to give the exchequer more than you have to. That’s a given. But this has now been taken to ridiculous extremes and those in power don’t seem to be keen to do much about it. One has to ask, do they feel unable to address an issue that’s too big for them? Are eBay and Vodafone more powerful than the tax authorities? So it would seem, or are those who run things anxious not to upset those who would be the most likely to employ them once their time in politics has come to an end?

That’s not to say that business and industry shouldn’t be wide awake and a step ahead. It should be on its toes. That’s what keeps a successful business successful. But the government watchdogs shouldn’t be more than a step behind – not the half a dozen steps and increasing that seems to be the situation right now.

I suggested to my accountant… Yes, I use an accountant, quite a reputable one. Firstly, I don’t want to get it wrong. Secondly, I need those tax breaks that are available to what Leona Hemlsley referred to as ‘the little people’. I asked my accountant if I could do what mobile phone giant Vodafone’s UK head honcho was reputed to have done; discussed just how much tax the company should pay over lunch with a senior Inland Revenue official. She clearly didn’t think it was much of an idea.

But if the head of the office that deals with my taxes would like to drop me a line, I’d be more than happy to meet him or her for lunch at the Bluebird Café. The Bluebird does an excellent ham, egg and chips. Or he (or she) could go for the pie and mash and a mug of tea. It’s on me, guys, and it’s tax-deductible as ‘entertainment’, so you can fill your boots and go for a post-lunch ice cream as well while we discuss the delicate subject of how much tax I feel like paying this year.

What the hell, if it’s good enough for Vodafone, shouldn’t it work for me as well?

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You are right, Quentin. There is so much more to this. In 1999 I started my little online internet business for about $100. I made a net profit my first year and have every year since. Jeff Bezos made the cover of Time Magazine as the 1999 Person of the Year for his internet business. Something called Amazon.com. Amazon.com lost 719 million dollars in 1999 – you can look it up. Life seems so unfair. It seems I should have been on the cover of Time Magazine, not Jeff Bezos. I ran the more profitable internet business. Boo hoo.

Thanks, Kevin. You’re right. You should be on the cover of Time. Running a profitable internet business for 15 years is no mean achievement.
But maybe you should have thought bigger? If you owe the bank $100, then you have a problem. If you owe the bank $719 million – then it’s the bank that has a problem.